Magnesite

PROSPECT RIDGE PROJECT

Exploration Licence EL5/2016 covering the Arthur River and Lyons River magnesite deposits (“Project”) in north-west Tasmania was granted in September 2016. Geoscience Australia’s website notes that the Arthur-Lyons River area now covered by EL5/2016 contains the third largest inventory of magnesite Economic Demonstrated Resources (EDR) in Australia (refer www.ga.gov.au).

Magnesite is the primary source of magnesia (MgO), which is mainly used in agriculture, mineral processing, paper manufacture and refractory industries. Magnesia is also used to produce magnesium (Mg), a light metal widely used in the aerospace, automotive and electronics industries. Both magnesite and magesium are included on the EU’s latest list of 20 critical materials.

Jindalee recently reported a JORC 2012 compliant inferred resource of 25Mt @ 42.4% MgO, with metallurgical testwork currently underway. No resources were estimated for the Lyons River deposit.

Jindalee holdes a 100% beneficial interest in the Project, with the consultant who introduced the Project to Jindalee retaining a 1% gross royalty.

Prospect Ridge Project – Location Plan & Simplified Geology

Background

EL5/2016 is centred approximately 55km SW of Burnie, Tasmania (refer Figure 1). Magnesite was first discovered in the area in 1925 with exploration in the 40 years from 1970 to 2010 undertaken by companies including Mineral Holdings Australia, CRA (now Rio Tinto), TasMag and Crest Magnesium significantly advancing the Project to the point where, in September 1999, Crest Magnesium rejected an offer from Xstrata (now Glencore) to purchase the Project for $105M in cash and royalties.

African coal miner Beacon Hill Resources Plc (AIM: BHR, ASX: BHU) (“Beacon Hill”) purchased the leases covering the Arthur River and Lyons River deposits in September 2009 and in the period to 2014 completed extensive pre-development activities at the Arthur River deposit including drilling, hydrological studies, environmental and Aboriginal Heritage studies, metallurgical testwork and resource estimates.

However, the slump in coal prices, which began in 2011, impacted on Beacon Hill’s African coal operations and the company was unable to service its high level of debt. In January 2015 Beacon Hill was placed into administration and the leases covering the Arthur River and Lyons River deposits lapsed.

On 2 May 2012 Beacon Hill released estimated Inferred Resources of 25Mt @ 42.4% MgO (40% MgO cut-off) for the southern part of the Arthur River deposit only. These resources were reported in accordance with the JORC Code (2004) and were estimated by Stewart Capp from Derwent Geoscience Pty Ltd. No resources were estimated for the Lyons River Deposit.

Jindalee engaged Stewart Capp to review this earlier resource estimate and to report the resource estimate in accordance with the JORC Code (2012) if possible. As a result of this review, at a lower cut-off grade of 40% MgO, an Inferred Resource was estimated which totals 25 million tonnes of fresh magnesite grading 42.4% Mgo, 4.8% SiO2, 1.4% Fe2O3 and 2.6% CaO to an average depth of 100m below the surface. This estimate assumes that resh magnesite can be easily separated from zones of internal weathering.

The resource estimate is summarised at a series of cut-off grades in the table below:

Jindalee has collected two bulk metallurgical composite samples from the Arthur River deposit, comprising ~30kg of oxidised mineralisation and ~70kg of largely fresh magnesite. The two samples (each averaging >40% MgO) were collected from historic drill core and are considered to be representative of typical oxide and fresh mineralisation in the upper 70m of the deposit.

These samples are currently being calcined (heated to between 700°C and 1000°C) to produce caustic calcined magnesia (CCM). In addition to the calcination testwork, the metallurgical program will examine the further use of flotation, both prior to the calcination stage and after calcination, as a method of maximising the grade of the calcined magnesia product. Several combinations of calcine and flotation processes are being trialled at a small scale prior to selection of a preferred route for larger scale tests. Results from the work to date have been mixed. The Company is testing several alternatives to improve recoveries, with results to be announced once all stages of the program are complete. Depending on the results of this testwork, Jindalee also intends to evaluation Beacon Hill’s scoping study¹ in light of favourable exchange rate movements and lower mining industry input costs since May 2012, and recent increases in the price of magnesia products.

EL2/2016 covers 14km of prospective stratigraphy between the Arthur River and Lyons River deposits. Most work to date has been focused on the southern part of the Arthur River deposit and Jindalee considers there is excellent potential to increase the Project’s resource base, both at the Arthur River and Lyons River deposits and along strike from these deposits.